TRUSTED ANALYSIS FROM THE
WISCONSIN TAXPAYERS ALLIANCE
F OCU S
In brief
In 1998, 7.6% of state residents participated in Medicaid, the federal/
state program that provides health
care to the poor, elderly, and disabled.
Today, that percentage has jumped to
19.1%. Over the past decade, Medicaid enrollment has grown 174% to
almost 1.1 million residents. Total
federal/state costs are up 140.7%
to $6.05 billion.
Capitol notes
n Eight current and former presidents of the UW Board of Regents,
both Democrats and Republicans,
urged veto of a bill that would have
appointed Regents by regions.
“Balkanizing” the Regents will
compromise “the broader goals of
the UW System” and “encourage
unnecessary duplication,” the eight
wrote the governor . . . who has
since vetoed the bill.
n The Legislative Audit Bureau
(LAB) reports “deficiencies” in
accounting and reporting by the
State Life Insurance Fund. For example, there was a $616,572 difference between surplus account
balances reported on balance sheets
vs. operational summaries. Other
errors included understating investment income and general expenses.
Overall, the LAB found that unaudited
balances exceeded audited balances
in every year from 2005 on.
n Attorney and State Rep. Gary
Sherman (D-Port Wing) has been
appointed to the State Court of
Appeals (District IV) to replace retiring judge Burnie Bridge. A special
election will be held to fill Sherman’s
74th district seat.
wis
tax
Medicaid in state-budget driver’s seat
12.15.2009 • No. 25
W
hile national health care reform
has dominated the headlines for
much of the year, Wisconsin’s major efforts in this area for more than 10 years
have gone comparatively unnoticed.
Nevertheless, in 1998, less than one in
13 state residents was covered by Medicaid (see box, reverse side); but, today,
that figure is closer to one in five.
as Medical Assistance (MA), confirms
the increased emphasis placed on covering children and families (now, Badger
Care, or BC). Although categorization
of recipients is somewhat problematic
given program changes since 1998, total
numbers receiving family-related care
(now BC) surged 238.6%, from 217,035
to 734,935. However, the recipient count
Wisconsin Medicaid Participants and Costs Rise in Past Decade, 1998-2009
Participants (000, left); costs ($m, right). BC=Badger Care, b=budgeted. Sources: DHS, LFB.
$7,500
1,084.9
1,000
Total
776.4
6,047.4
Total
(US+State)
854.8
735
750
$5,000
4,562.1
4,552.9
546.6
Family/BC
464
500
2,512.4
$2,500
395.9
1,818.4
2,117.7
350
Other
313
217
250
State Tot.
2,362.9
'GPR'
904.8
179
1,137.8
$0
0
98
99
00
01
02
03
04
05
06
07
08
09
Participant count grows
To be sure, rising health care costs
over the past decade have pushed Medicaid spending higher. But in Wisconsin,
expanded program eligibility has been a
major cost driver.
o Totals. As the graph above (left)
shows, from November 1998 to the same
month in 2009, total Medicaid enrollment
numbers, according to the Department
of Health Services (DHS), rose 174.0%,
from 395,900 to 1.085 million (m). Though
increases in program enrollees varied from
year to year, they averaged 9.6% annually.
o Categories. A second look at the
recent history of Medicaid, also known
98
00
02
04
06
08
10b
of other groups (e.g., elderly and disabled) has grown comparatively less—
95.6% to almost 350,000.
Costs up, too
Over roughly the same 1998-2009
period, new figures from the Legislative
Fiscal Bureau (LFB) show total MA program costs in the Badger State—federal and state dollars combined—grew
140.7%, from $2.51 billion (b) to $6.05b.
The average annual increase was 8.3%.
Total costs are budgeted to reach $6.35b
by mid-2011.
Excluding federal funds, growth in
total state monies going to Medicaid
since 1998 have kept pace, rising
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134.1%, or an average of 8.0% annually. State funds include both general
purpose revenues (GPR)—mainly income, sales, and excise taxes—and other
sources, such as fees and the Medicaid
Trust Fund. Both federal-state and
state-only totals are shown in the preceding graphs.
Two growth spurts
Prior to 1998, MA spending grew,
but at a slower pace than now. Between
1990-91 and 1997-98, expenditures increased 51.7%, or an average of 6.1%
per year. Since then, there have been
two periods of accelerated growth.
The first was in the late 1990s, when
welfare reform replaced Aid to Families
with Dependent Children (AFDC) with
Wisconsin Works (W-2). Although welfare caseloads dropped, participation in
Medicaid through the new Badger Care
program grew. The goal of the program
was to continue publicly funded health
care as ex-welfare recipients went to work.
The second period of accelerated
growth occurred since 2006. Medicaid
was effectively extended to virtually all
children. And, in the 2009-11 budget, it
was further expanded to childless adults,
though enrollment has been suspended.
Current, future problems
During 1998-2009, MA spending by
both state and federal governments in-
About Medicaid
Medicaid, or Medical Assistance (MA),
was enacted in 1965, along with Medicare.
While Medicare serves seniors, MA provides health care for 62 million low-income
Americans. Half are children, and another
fourth are parents or pregnant women. The
remaining 24% of MA clients are elderly
and disabled; however, they account for
66% of benefit payments. In Wisconsin,
Medicaid includes the Senior Care prescription drug program.
In 2008, the federal government spent
$201b on MA, and states contributed the
remaining $152 million. On average, the
federal government covered about 57% of
costs, but this percentage varies from 50%
to about 75%. In Wisconsin, the percentage has been in the 58%-to-59% range.
creased by an average of 8% to 9% annually. Whether either government can
sustain this rate of growth is questionable.
o State comparisons. During the
12 years studied, state support for Medicaid, whether it be from taxes or from
various fees, rose an average of 8.9%
per year. By comparison, total state general fund spending was up an average
of 2.4%. Other than MA, most major
state programs grew at similar or lower
average rates, including school aid (2.4%),
county and municipal aid (-0.6%), and
the UW System (2.3%). Even corrections expenditures, which rose quickly
in the 1990s, averaged lower rates of
growth than Medicaid (6.1% vs. 8.9%).
o Federal trends. Federal budget
problems are worse than Wisconsin’s,
and the nature of those challenges is well
documented. This summer, the Congressional Budget Office (CBO) reported that, in 2008, total national debt
held by the public stood at 41% of U.S.
output (gross domestic product, or GDP)
and projected it would reach 61% by
2010, 79% by 2035, and surpass the
World War II record of 113% by 2046.
CBO’s alternate forecast, “which many
budget analysts believe . . . presents a
more realistic picture,” sees debt at 87%
of GDP in 2020, 113% in 2026, and 200%
(double the nation’s output) in 2038.
According to CBO, “almost all of
the projected growth in federal spending other than interest payments on the
debt” will come from Social Security,
Medicare, and Medicaid. And the latter
two will account for 80% to 90% of the
increase over the next 70 years.
More than a year ago, CBO director Peter Orzag (now the president’s budget director) told the Senate Finance
Committee: “The federal budget is on
an unsustainable path—that is, federal
debt will grow much faster than the
economy over the long run.” He went
on to say that “changing those programs
[Medicare and Medicaid] in ways that
reduce the growth of costs . . . is ultimately the nation’s central long-term
challenge in setting federal fiscal policy.”
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